NEW STRATEGY FAILS: The megastore closed suddenly two weeks ago. It is now dealing with its creditors as it goes into liquidation. -- ST PHOTO: JOYCE FANG

So what happened?

The simple answer, according to managing director Robert Young: The working capital, or the money needed to keep the store going, had been miscalculated.

'I pumped in $10 million but it was not enough, and we couldn't get any more from the banks,' he told The Straits Times. Even a boost last year did not help - the taps ran dry, delaying payments and, in turn, slowing the arrival of goods.

Mr Young continued trying to keep the store afloat, but one creditor went to court in June, sending things into a tailspin.

'I guess one thing led to another...other creditors started pulling merchandise, and my lawyers said that if I didn't get in a provisional liquidator to exercise some control, things would be very chaotic,' said the former investment banker, who is in his late 40s.

So now, the man who bought over Safe Superstore when it went into receivership in 2003 - with big plans to turn it around - is finding himself in the same boat.

BiG owes some $21.2 million to creditors, including landlord Mapletree Investments, suppliers, and even contractors.

KPMG Business Advisory, which provides tax, financial and audit services, has been asked to manage the proper disposal of its assets and is expected to be formally appointed liquidators at a creditors' meeting on Wednesday.

BiG's misfortunes did not begin with the usual suspects such as an out-of-the-way location, said Mr Young. In fact, its spot at the HarbourFront Centre ensured high traffic and brisk sales.

So what went wrong?

Mr Young said the company made the mistake of changing its business strategy early this year.

BiG is the latest incarnation of Safe Superstore, first founded as SAF Enterprises in the 1970s, selling affordable household goods to army personnel.

Although the store is no longer linked to the army, Mr Young adopted a 'low margin, high volume' strategy, offering low prices to customers.

But early this year, the store veered away from that and tried to earn bigger margins while bringing in fewer goods, although that meant paying suppliers a higher price, he explained.

Turnover took a hit, plummeting to $12 million in the first six months of this year. Cash-flow issues became an even bigger problem.

The slew of competing megastores which have opened across the island and at nearby VivoCity gave it little breathing space.

The company fell behind on payments, including rent for the 80,000 sq ft outlet. At $3.60 per sq ft, rent set it back just under $300,000 a month. BiG's landlord, Mapletree Investments, tried to help out by organising instalment payments, but the downward spiral could not be stopped.

Then, Mr Young conceded, another wrong move was made - the company decided to sell off its Credit Instalment Scheme. This consumer finance part of the business - allowing customers to buy on credit, with their interest payments going towards the store's takings - is usually a cash cow.

The store had been in talks with Safe Money, a subsidiary of TT International. The sale was completed on June 27, three weeks before BiG went bust, TT International executive director Julia Tong said.

Customers have been assured that their instalment plans will be transferred to Safe Money, and they can use their unused credit at all consumer electronics, lifestyle and furniture stores owned by TT, which makes the Akira range of electronic appliances and owns Novena Holdings' seven brands, including Natural Living.

Mr Young said the store is now dealing with its creditors as it goes into liquidation. But it is also trying to assist some 300 customers who have been left stranded.

KPMG Business Advisory said some have paid in full for items in advance, and if these are still in stock, they will be able to collect them.

Mr Young said Safe Money has volunteered to try and help some of the other customers left in the lurch.

For Mr Jonathan Wong, that is good news. He paid BiG $4,699 in cash for a 50-inch Hitachi plasma television set in June but wanted it delivered only this month.

Existing warranties provided by BiG will be honoured, said Mr Yeap Lam Kheng, executive director of KPMG Business Advisory.

arti@sph.com.sg